Timing premia measure how much consumption people are willing to forgo to resolve all consumption uncertainty immediately. We develop a novel experiment to elicit these attitudes directly in a model-free way. On average, subjects forgo around 5% of their total consumption to resolve all uncertainty immediately. Recursive utility models postulate a structural link between timing premia and deep preference parameters. We elicit these preference parameters separately and estimate corresponding predicted timing premia. Comparing directly elicited and predicted timing premia allows us to test this structural link. Surprisingly, we find a negative correlation between predicted and elicited timing premia.
- c91 - Design of Experiments: Laboratory, Individual
- o40 - Economic Growth and Aggregate Productivity: General
- g12 - "Asset Pricing; Trading volume; Bond Interest Rates"
- e24 - "Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital"
- e44 - Financial Markets and the Macroeconomy
- preference elicitation
- recursive utility
- risk and time preferences
- timing of resolution of uncertainty
- timing premia
- Timing of resolution of uncertainty
- COGNITIVE REFLECTION
- Preference elicitation
- Timing premia
- Risk and time preferences
- Recursive utility